If a Good Is Subject to a Binding Price Ceiling

question 93

Multiple Choice

If a good is subject to a binding price ceiling and Anna purchases it on the black market,what can she expect to happen to the availability of the good over time?

• A) The availability of the good will rise over time as the supply curve becomes more elastic and the demand curve becomes more inelastic.(The shortage of the good will fall. )
• B) The availability of the good will fall over time as both the supply and demand curves become more elastic.(The shortage of the good will fall. )
• C) The availability of the good will fall over time as both the supply and demand curves become more elastic.(The shortage of the good will rise. )
• D) The availability of the good will rise over time as the demand curve becomes more elastic and the supply curve becomes more inelastic.(The shortage of the good will fall. )
• E) The availability of the good will not change over time.

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Definitions:

Equilibrium Price

The price in the market where the amount of a product that consumers want to buy is the same as the amount available for sale, resulting in a balanced market situation.

Demand Schedules

Tabular representations showing the quantity of a good or service that consumers are willing and able to buy at various prices, over a specified period.

Surplus

In economics, the amount by which the quantity of a product exceeds the quantity demanded at a specific price.

Shortage

A market condition in which demand for a good or service exceeds the supply available at a specific price.